An interim report from Rolls-Royce shows how dire the offshore marine sector is likely to be going forward.
The company noted today that the offshore marine markets have continued to deteriorate throughout the year and, as a result, 2016 forecasts in this division have been slashed.
The key offshore equipment supplier said it is setting expectations to reflect a further 15-20% decline in offshore marine market demand, weakening marine profit by a further £75m-100m.
As a result Rolls-Royce warned proposals for major structural changes are being finalised for implementation during 2016 aiming to make savings of up to £200m a year. “These will simplify the organisation model, streamline senior management, reduce fixed costs and add greater pace and accountability to decision making,” the company said in a statement.
The company’s marine division has laid off around 1,000 staff so far this year. Offshore redundancies across the world have topped 200,000 in the past 12 months as low oil prices have wreaked havoc on drilling development plans in every corner of the world.
Splash’s offshore columnist Mike Meade, founder of Singapore broker M3 Marine, warned in a recent column that the offshore sector has been so firmly shaken to its core that even when oil prices revive players in the industry will have to operate in a new pricing environment.
“Industry players are preparing to tide over this storm by implementing drastic measures, such as severe cost cutting and layoffs, to prepare their organisations for a different and more challenging business climate, with a shift in the way the industry is priced when we come through the downturn,” Meade wrote, something it appears Rolls-Royce is preparing for.